FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[rros]

Not sure how this changes things.  Notably this sentence seems to maintain a distinction between potential shareholders:

 

"The district court may need to redefine or subdivide the class depending upon what that court determines were the various plaintiffs’ reasonable expectations."

Looks like I only read the conclusion lol... sorry.

[Guest cherzeca]

this tweet shows the before and after opinions:  https://twitter.com/DoNotLose/status/887029040481263616

 

it is clear that circuit court backed off language saying that the Ps reasonable opinions should be measured differently among plaintiffs in the class based upon their respective times of purchase.  it does not go on to state what i think the correct rule is, that those expectations for all plaintiffs is to be measured at time of the junior stock issuance (all before NWS).  leaves this up to district court.

 

so net net, this is a win for Ps insofar as it permits district court to use the right rule, assuming it also doesnt screw up like the circuit court did.

 

EDIT:  this order goes through the deletion/addition to the opinion:  http://www.gselinks.com/Court_Filings/Perry/14-5243-1684471.pdf

[investorG]

mkt so far giving no credibility or value to the perry remand potential.

[Guest cherzeca]

mkt so far giving no credibility or value to the perry remand potential.

 

In my mind this gives some support to adopting an administrative solution that settles litigation. Congress is just ignoring litigation.

[Luke 532]

Proposed budget = privatized GSE's

 

https://www.thestreet.com/story/14233125/1/fannie-mae-and-freddie-mac-would-be-privatized-under-proposed-house-budget.html

[Midas79]

Proposed budget = privatized GSE's

 

https://www.thestreet.com/story/14233125/1/fannie-mae-and-freddie-mac-would-be-privatized-under-proposed-house-budget.html

 

I don't think this is as good as it sounds. Hensarling wants all guarantees - implicit and explicit - done away with for FnF.

 

It is kind of strange to have the libertarian and some tea-party types advocate for no guarantee, while other Republicans and many Democrats want a fully explicit guarantee. Thus far we have ended up in the middle with an implicit guarantee, and I think that's where we will stay because neither the no guarantee nor explicit guarantee sides have enough pull to overcome the other.

 

I do see this as good news in that a large-scale housing finance reform package will be very difficult to get to Trump's desk before January. This budget reinforces the belief that a Senate bill including an explicit guarantee will likely die in the House, and the House might even push back against a Jumpstart-style rider if they see it as an undesirable continuation of the zero-capital conservatorship that keep taxpayers on the hook.

[Guest cherzeca]

"Privatize the Business of Government-Controlled Mortgage Giants Fannie Mae and Freddie

Mac. In 2008, the federal government placed Fannie Mae and Freddie Mac in conservatorship to

prevent them from going bankrupt. The Treasury has already provided $187 billion in bailouts to

Fannie and Freddie, and taxpayers remain exposed to $5 trillion in Fannie Mae and Freddie

Mac’s outstanding commitments, as long as the entities remain in conservatorship. Our budget

recommends putting an end to corporate subsidies and taxpayer bailouts in housing finance. "

 

p.26 of https://budget.house.gov/wp-content/uploads/2017/07/Building-a-Better-America-PDF-1.pdf

 

you tell me what this means...

[Midas79]

you tell me what this means...

 

A highlight of the difference from last year's budget.

 

https://twitter.com/Alec_Mazo/status/887399470752714752

 

I see good and bad here.

 

Good: this is the second time that we have seen a major player remove mention of eliminating FnF (the Presidential budget and now this House budget) while maintaining that the status quo should not continue. Release back to shareholders is by far the easiest outcome of those that remain.

 

Bad: they are still using the $5 trillion number as scare-mongering; there is no way the government would ever be on the hook for anything close to that full amount, even as things stand with zero capital buffer. They also mention the $187 billion in initial bailouts while leaving out that the government has turned a handsome profit. One would think that the FnF situation would be the least objectionable bailout ever to fiscal hawks, by whom this budget was clearly written.

 

The 2016 budget also mentions that FHA had not maintained its congressionally mandated 2% capital ratio, putting taxpayers at further risk. This isn't mentioned in the 2017 budget; has it been addressed? I don't know anything about the FHA and its capital buffer. But it does tell me that perhaps the House would approve of a released FnF with an appropriate capital buffer.

[Guest cherzeca]

Proposed budget = privatized GSE's

 

https://www.thestreet.com/story/14233125/1/fannie-mae-and-freddie-mac-would-be-privatized-under-proposed-house-budget.html

 

I don't think this is as good as it sounds. Hensarling wants all guarantees - implicit and explicit - done away with for FnF.

 

It is kind of strange to have the libertarian and some tea-party types advocate for no guarantee, while other Republicans and many Democrats want a fully explicit guarantee. Thus far we have ended up in the middle with an implicit guarantee, and I think that's where we will stay because neither the no guarantee nor explicit guarantee sides have enough pull to overcome the other.

 

I do see this as good news in that a large-scale housing finance reform package will be very difficult to get to Trump's desk before January. This budget reinforces the belief that a Senate bill including an explicit guarantee will likely die in the House, and the House might even push back against a Jumpstart-style rider if they see it as an undesirable continuation of the zero-capital conservatorship that keep taxpayers on the hook.

 

the crux of the MBA plan is fed govt guarantees on mbs.  no way there can be multiple monoline insurers competing with FnF w/o fed mbs guarantees.  and i see MBA as being the biggest FnF adversary

[waynepolsonAtoZ]

The OMB chief had sponsored some FnF equity investor friendly legislation when he was in Congress (SC or GA I think).

[Guest cherzeca]

The OMB chief had sponsored some FnF equity investor friendly legislation when he was in Congress (SC or GA I think).

 

Yes mulvaney. But this is from house budget committee released budget proposal

[rros]

Question about the new order re-issued by the Appeals court.

 

Investors Unite stated today: "The court now says damages for breach of contract claims are no longer based on when shareholders bought their shares but when the shares were issued."

 

That was my first interpretation. Then, I read what others said here that this decision has been passed to Lamberth. So what is it?

[Guest cherzeca]

@rros

 

new opinion language as follows:

 

"We remand this claim, insofar as it seeks damages, for the district court to

evaluate it under the correct legal standard, namely, whether the Third

Amendment violated the reasonable expectations of the parties. We note that

the class plaintiffs specifically allege that some class members purchased their

shares before the Recovery Act was enacted in July 2008 and the FHFA was

appointed conservator the following September, while others purchased their

shares later, but the class plaintiffs define their class action to include more

broadly “all persons and entities who held shares . . . and who were damaged

thereby,” J.A. 262-63. The district court may need to redefine or subdivide the

class depending upon what that court determines were the various plaintiffs’

reasonable expectations. If the district court determines the enactment of the

Recovery Act and the FHFA’s appointment as conservator affected these

expectations, then it should consider, inter alia, (1) Section 4617(b)(2)(J)(ii)

(authorizing the FHFA to act “in the best interests of the [Companies] or the

Agency”), (2) Provision 5.1 of the Stock Agreements, J.A. 2451, 2465 (permitting

the Companies to declare dividends and make other distributions only with

Treasury’s consent), and (3) pertinent statements by the FHFA, e.g., J.A. 217

¶ 8, referencing Statement of FHFA Director James B. Lockhart at News

Conference Announcing Conservatorship of Fannie Mae and Freddie Mac (Sept.

7, 2008) (The “FHFA has placed Fannie Mae and Freddie Mac into

conservatorship. [Conservatorship] is a statutory process designed to stabilize a

troubled institution with the objective of returning the entities to normal business

operations. FHFA will act as the conservator to operate the Enterprises until

they are stabilized.”)."

 

clearly circuit court lets district court decide if HERA affected reasonable expectations; depends on what "correct legal standard" is. if HERA didnt affect reasonable expectations, then these expectations were baked into the shares when issued.  so no IU is not right to say that circuit court determined it for the district court

[rros]

Thank you, Chris.

[Guest cherzeca]

one benefit from having cooper & kirk handle multiple appeals is that they read all of defendants briefs carefully.

 

cooper filed this letter in the 6th circuit:  http://www.gselinks.com/Court_Filings/Robinson/16-6680-0041.pdf  treasury interprets "may" as "instructing" fhfa in one HERA section, but not in another.

 

cooper says that treasury cant have "may" be understood as permissive in one HERA section and mandatory in another.  we will see whether this gets any play in the 6th and 8th circuits, but i would expect cooper to bang the table at oral argument at both circuits that "may" in the context of its repeated usage in HERA is mandatory...or else there is a cosntitutional question reaised by a congressional delegation to fhfa of completely unfettered discretion

 

[investorG]

for those who missed it (including corker/warner), today's senate hearing was characterized by deep appreciation for the 2 (and no more) GSEs by the 6 community bankers.  the Democrats are also supportive and unlikely to go along with anything radical that the elitists come up with. 

[Luke 532]

for those who missed it (including corker/warner), today's senate hearing was characterized by deep appreciation for the 2 (and no more) GSEs by the 6 community bankers.  the Democrats are also supportive and unlikely to go along with anything radical that the elitists come up with.

 

That was my takeaway as well.

[Guest cherzeca]

for those who missed it (including corker/warner), today's senate hearing was characterized by deep appreciation for the 2 (and no more) GSEs by the 6 community bankers.  the Democrats are also supportive and unlikely to go along with anything radical that the elitists come up with.

 

I heard intros. A few spoke about paid for explicit fed guarantees. Any subsequent discussion about whether they were referring to mbs level guarantees or GSE backstops?

[investorG]

for those who missed it (including corker/warner), today's senate hearing was characterized by deep appreciation for the 2 (and no more) GSEs by the 6 community bankers.  the Democrats are also supportive and unlikely to go along with anything radical that the elitists come up with.

 

I heard intros. A few spoke about paid for explicit fed guarantees. Any subsequent discussion about whether they were referring to mbs level guarantees or GSE backstops?

 

they want explicit guarantees (catastrophic reinsurance) on the GSE issued MBS, to be paid for by a portion of the G-fees.  I do not think they want all mbs to have explicit guarantees and they aggressively pushed against participants being involved in both the primary and secondary markets, even if it involved passive investments in either segment.  basically it was an amazingly reasoned discussion today and the most important part was I think the Dem power players who actually have an idea of what's going on (brown, menendez, and heitkamp) showed which side they are on. 

[Guest cherzeca]

for those who missed it (including corker/warner), today's senate hearing was characterized by deep appreciation for the 2 (and no more) GSEs by the 6 community bankers.  the Democrats are also supportive and unlikely to go along with anything radical that the elitists come up with.

 

I heard intros. A few spoke about paid for explicit fed guarantees. Any subsequent discussion about whether they were referring to mbs level guarantees or GSE backstops?

 

they want explicit guarantees (catastrophic reinsurance) on the GSE issued MBS, to be paid for by a portion of the G-fees.  I do not think they want all mbs to have explicit guarantees and they aggressively pushed against participants being involved in both the primary and secondary markets, even if it involved passive investments in either segment.  basically it was an amazingly reasoned discussion today and the most important part was I think the Dem power players who actually have an idea of what's going on (brown, menendez, and heitkamp) showed which side they are on.

 

Thx G

[waynepolsonAtoZ]

I like that legal standard. How could the 3rd Amendment have not affected the reasonable expectations of preferred investors.

 

Thank you Fairholme for pursuing this. I guess Perry has lost interest (don't really blame them at this point).

[Luke 532]

Gretchen Morgenson article out just now...

 

U.S. Foresaw Better Return in Seizing Fannie and Freddie Profits

https://www.nytimes.com/2017/07/23/business/fannie-freddie-treasury-lawsuit.html?smid=tw-share

 

[Guest cherzeca]

NYT gretchen morgenstern on what the govt knew before NWS. spoiler alert: ugoletti affidavit not truthful. see docs below

 

https://www.nytimes.com/interactive/2017/07/23/business/document-policy-change-housing-rescue.html#document

 

 

[waynepolsonAtoZ]

St. Gretchen.

[Midas79]

How recently were the documents that Gretchen Morgenson referenced released?